Organizational Forms and National Institutions
Edited by Marcela Miozzo and Damian Grimshaw
Chapter 5: Make and/or Buy of IT-enabled Services Innovation: The Case of the US Express Delivery Industry
Volker Mahnke, Mikkel Lucas Overby and Serden Özcan INTRODUCTION IT-enabled innovations are of increasing importance for competitive success. By ‘innovation’ we mean ‘the generation, acceptance, and implementation of new ideas, processes, products or services’ (Thompson 1965, p. 2). Innovations are IT-enabled when they blend hardware and/or software assets with business capabilities to generate a novel process, product or service. If adopters of IT-enabled innovation do not command all necessary competence in-house and internal development is slow and costly, ‘distributed capabilities’ need to be coordinated across ﬁrm boundaries (Barney and Lee 2000; Coombs and Metcalfe 2000; Quinn 2000). Hence, ﬁrms must ally with external partners that can provide the required knowledge intensive business services through sourcing relations. Against the backdrop of the importance of IT-enabled innovation, the key question of this chapter is how do capability development strategies diﬀer between ﬁrstmovers and late entrants in IT-enabled services. While the literature agrees on a general level that governance choices with regard to developing capabilities for IT-enabled services are consequential (Argyres and Liebeskind 2000; Barney and Lee 2000; Chesbrough and Teece 1996; Quinn 2000) because they have long-term consequences and are hard to reverse, it is far from clear how companies choose to develop capabilities for IT-enabled innovation – in-house or through outsourcing. On the one hand, Quinn (2000) asserts that today innovation calls for the complex knowledge that only a broad network of specialists can oﬀer and that companies can proﬁtably outsource almost any element in the innovation chain. Chesbrough...
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